Buying real estate in a college town
Although the housing market is stalling, many people are still looking to make some sound real estate investments.
But with this market, and all of the negative foreshadowing and predictions, it may be hard to know what a good opportunity to build wealth is and what could have negative impacts on your wallet.
One pretty much sure-fire investment in this uncertain market is buying real estate in a college town. Although this may seem like a risky move, there are tremendous benefits and opportunities to this investment strategy.
The article, “Why buying property near a University is a smart move,” by Jennifer Openshaw of The Wall Street Journal’s MarketWatch discusses the pros to buying in a college town.
“College towns make sense now more than ever -- if you play your cards right -- for the long term. Why college towns? Aren't they more expensive? And don't you run the risk of having your investment "partied" to death? You thought being a landlord was bad enough, but now for a bunch of rowdy twenty-year-olds?”
“Yes, yes and yes. College towns are typically more expensive -- as much as 20% or 30% more than nearby areas. And yes, students do party, and furthermore, many students aren't very experienced in the care and feeding of homes.”
Aside from these seemingly negative aspects, there are many reasons why you would want to do your buying near a college or University.
Although costs may be a bit more, the profits can be overwhelming and, it is all related to supply and demand.
“Real estate prices, like anything else, are a function of supply and demand. In college towns, demand is at least steadier, if not more destined to grow, than the average real estate market. Second, supply -- and the quality of homes in the area -- is usually constrained by strict zoning and growth controls, common in most college towns.”
More and more students are going to college than ever before, because people are realizing the importance of a higher education in today’s society. So this essentially means that more will be looking for homes, thus creating a demand.
Also, if you are worried about partying co-eds then you haven’t thought about the prospects of graduate students.
“The number of graduate and professional students is growing even faster -- almost 25%. More of these students are married, come from abroad and/or look for the stability of a two- to three-year lease commitment. And they are less likely to host Saturday night keg parties.”
Many soon-to-be retirees are also looking at college communities as places to spend the rest of their lives, due to the physical and mental stimulation the towns provide for everyone.
When looking to buy real estate in a college town, the most important thing to think about is the up-keep of the property, since this is one of the biggest risks.
“Finally, make sure you know how the place will be cared for. Hire it out. As a rule, college students don't have the experience nor the time to do a great job keeping a place up. ‘The pitfall usually isn't the property, it's how it's taken care of,’ adds Spiegel.”
